Corporate Social Responsibility (CSR) Initiatives: Practices and Issues
| DOI | 10.1177/0019556120160403 |
| Author | Nand Dhameja |
| Date | 01 October 2016 |
| Published date | 01 October 2016 |
| Subject Matter | Article |
CORPORATE SOCIAL RESPONSIBILITY (CSR)
INITIATIVES: PRACTICES AND ISSUES
NANO DHAMEJA
CSR is an age-old concept
and
business organisations have been
contributing towards social
and
community development. It is the
deliberate inclusion
of
public concern into corporate decisions
with a fundamental principle not only as a public policy. but
also that corporates should be responsive to social issues
and
it
revolves around sustainability, accountability
and
transparency.
Thus, CSR involves relocation
of
resources from private to public
bodies
for
environmental
and
social benefits
and
integrates
organisational core business with social
and
environmental
concerns
of
the community; so as to provide impetus to economic
development
and
improve the living standard
of
the people.
CSR
has
been
used
differently
in
various
countries
and
approaches
followed
are categorised in three broad heads
as: CSR as corporate philanthropy wherein contribution is
for
activities in the areas such as arts, health, education,
social welfare, environment, housing, sanitation;
or
CSR as
value creation with a focus on core business;
or
CSR as risk
management to mitigate operational risks and supports external
relationships.
India is the only country where CSR has been enforced by a
legislation wherein profitable listed companies above a certain
size are required to contribute a certain percentage
of
profit
towards prescribed activities. In other countries it is by voluntary
measures which vary from country
to
country. Studies have shown
that total CSR spend
fall
short
of
the government mandate
of
two
per
cent
of
profit. Education
and
healthcare attracted the largest
CSR spend, while empowering women, support
for
senior citizens
and
armed forces veterans saw no takers. The study highlights
the need to examine whether mandatory approach to CSR would
be effective than the voluntary incentivised scheme prevalent
earlier in India
and
elsewhere.
762
/
INDIAN
JOURNAL
OF
PUBLIC
ADMINISTRATION
VOL.
LXJII.
NO.
4,
OCTOBER-DECEMBER 2016
THE CONCEPT
of
separation
of
ownership
of
companies from their control
was argued by Berle and Means in their book,
The
Modern
Corporation and
Private
Property•
published in 1932. As such the management which exercises
control
is
not necessarily the owner
of
the company, and the objective
of
the
company is to maximise the wealth
of
its owners, i.e. shareholders.
As businesses grow and shareholders increase in number; there is
greater involvement
of
customers, employees, societal and environmental
resources; Berle and Means in the revised edition in 1967, pointed to the
disparity that existed between those who did have shareholdings and those
who did not. As a result, the business has to operate for stakeholders covering
shareholders, employees, customers, and society; and it necessitated the need
for corporate social responsibility (CSR), a topic gaining importance with
the involvement
of
society and environment in organisational functioning.
The article discusses various aspects
of
CSR and
is
divided into six parts.
Part I discusses origin and meaning
of
CSR. Part
II
presents approaches to
CSR. Why
is
CSR important and what is its significance as an indicator
of
good corporate governance,
is
the subject matter
of
Part
III.
The next part
discusses how CSR
is
enforced. Part V is devoted to CSR practices
in
India
and illustrates CSR models adopted
by
companies in India. Conclusion and
recommendations are presented in the last part.
CSR: Origin and Meaning
A business enterprise involving a number
of
stakeholders can have
detrimental effects on environment; oil spills, chemical manufacturing,
diamond mining, agriculture, and fishing are examples. Further, dumping
of
pollutants in rivers or harm to environment and harm to vulnerable
communities go hand in hand. In the light
of
this dark legacy, some
corporates have
_begun
to embrace a philosophy that balances "the pursuit
of
profit with a commitment to ethical conduct", that is CSR; Google Inc.
(GOOG) slogan sums up the idea
of
corporate social responsibility nicely:
"Don't be evil''.2
In fact,
CSR
has been practised by companies in the developed world
in a big way. Most
of
the large private universities in the United States
(US) were set up as a part
of
CSR activities undertaken by large corporates.
A lot
of
multinational companies contribute towards the development
of
societies in which they operate. A most notable example is Shell, an
Anglo-Dutch multinational oil and gas company, which supports the local
communities in Nigeria. In India, large-scale philanthropic activities were
undertaken
by
business houses to build some
of
India's finest institutions.
For example, Sir Ratan Tata Trust (SRTT) established in 1919, and Sir
Dorabji Tata Trust established in 1932, provide grants and partners with
organisations that engage in innovative and sustainable initiatives in the
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